[Interview] What can retailers in Europe learn from the BATX (Baidu, Alibaba, Tencent, Xiaomi)?

Mathieu Hamel is the CEO of Innovation is Everywhere, an innovation consulting agency based in Singapore. Specialized in innovation developing from emerging territories, Mathieu has built his expertise from monitoring and trend analysis in Asia, especially on the Chinese tech giants. Innovation Is Everywhere also organizes learning expeditions in Asia for Western companies.

Who are these BATX and why are they so little known in the West?

The BATX (Baidu, Alibaba, Tencent, Xiaomi) are the Chinese twins of the GAFA (Google, Amazon, Facebook, Apple). They consist of a search engine, Baidu; an e-commerce platform, Alibaba; a social network, Tencent; and a connected device manufacturer, Xiaomi. These now-gigantic twins are not well known in the West for two reasons. First of all, the GAFA gets all of our attention. Secondly, these giants have developed in China where Western companies like Facebook, Google and Twitter are banned. This has allowed them to grow with little competition in their country of origin, but they have not really penetrated other markets, until today.

How do they compare to the GAFA?

Their core business are similar, that is for sure. However, a key differentiator for the BATX from their American counterparts is their creation of ecosystems to feed their expansion.. Today, companies like Tencent are investing in almost every industry, from transportation with Didi Chuxing or Mobike, health with iCarbonX, robotics with UBTech, and so much more to truly offer a complete ecosystem of products and services. Unlike the GAFA, with the very challenging conditions of the Chinese market, the Chinese tech giants do not hesitate to put similar startups, which they have invested in, in direct competition with each other to determine which is the best. Lastly, we look at the importance of the data. If the Americans and the Chinese are today the largest owners of data and leading the artificial intelligence movement, the Chinese have an added benefit from being able to leverage on an extraordinary volume of domestic data and the strong support of the government of Xi Jinping to emerge as the winners.

What is their position in (e-)commerce in China?

As far as e-commerce is concerned, Alibaba is of course the leader in China. On the last Single’s Day Shopping Festival, the platform sold products for 25 billion US dollars in 24 hours. Tencent is behind with 19 billion, via the platform JD.com, similar to that of Amazon. These are mind-blowing figures! Today these giants are exploring how to transform physical stores. Here again, their ecosystem strategy has shown incredible results, especially their integration of mobile payment solutions. Alipay and Wechat Pay, the mobile wallets for Alibaba and Tencent respectively, allow the two giants to close the loop when it comes to in-store commerce. Two examples have been particularly striking today. Alibaba is deploying its Hema Xiansheng stores to transform the customer experience in store, from the selection of products to mobile payment and even facial recognition payment. Bingobox, a startup specialised in cashier-free stores, created the first completely automated grocery store around WeChat. WeChat is used for everything from entering the store to paying at check out.

What lessons can European retailers learn from this?

The lessons are, in my opinion, very clear. We must be able to understand the actions and objectives of the BATX, because they don’t intend to remain in the shadows, in fact they will do quite the opposite actually. They will take more and more space in Asia – where they are already starting to expand. Tencent had already received a payment license in Malaysia last November, and giants like Tencent and Alibaba have been investing heavily in local startups across Southeast Asia and India. To succeed in China, a partnership with BATX has become a MUST. The arrangements made by Auchan in this area are, in my opinion, quite relevant. There is also a need for Europe to catch up on using data and artificial intelligence, even if any delay is due to a desire to protect users’ data. In general, the main lesson to remember is the BATX’s ability to integrate different services in a closed ecosystem. Like Alibaba and Tencent, these ecosystems today make it possible to have access to various integrated services through a common interface.

What technologies do they bet on today?

Today, the BATX invest heavily into artificial intelligence because, due to the diversity of its usage applications, it has become a priority to maintain their business advantage.. Baidu, for example, is very interested in AI to develop autonomous vehicles and mapping whilst Alibaba has already invested in smart cloud services for health and industry. Their warehouses are already fully automated. In addition to AI, Alibaba and Tencent are taking a close look at Blockchain, the technology behind Bitcoin, to improve and secure their supply chains.

This interview has been translated from French and been intially published in Le Lab Fevad.